nerc 2018 business plan and budget draft 1 … nerc business...•july 17 –post final draft nerc...

NERC 2018 Business Planand BudgetDraft 1 Overview NERC Finance and Audit Committee Conference CallMay 25, 2017

RELIABILITY | ACCOUNTABILITY2

Major Areas of Focus

• Budget and strategy alignment

• Analytical capabilities

• Standards review and cost effectiveness

• E-ISAC operations

• Employee development and training

• Resource allocation and efficiency of operations

• CMEP technology program

• Areas of upward pressure:

E-ISAC strategy

Geomagnetic Disturbance (GMD) analysis


2018 Preliminary Budget“Base Case”

NERC overall budget increase at 2.5%

for expenses and capital expenditures

EXPENSES and FIXED ASSETS (CAPITAL) 2017 2018 $ %

CMEP 17,305,535$ 20,469,789$ 3,164,254$ 18.3%

RRM 14,387,923 13,948,999 (438,924) -3.1%

Standards 8,100,282 7,417,626 (682,656) -8.4%

RASA 7,535,594 7,433,777 (101,817) -1.4%

Training, Ed, and Op Cert 3,757,501 3,109,974 (647,526) -17.2%

Programs (excluding E-ISAC) 51,086,835$ 52,380,166$ 1,293,331$ 2.5%

E-ISAC (without CRISP) 10,222,900$ 10,636,565$ 413,665$ 4.0%

CRISP - assessment funded 1,301,923 1,209,337 (92,586) -7.1%

CRISP - participant funded 6,990,517 7,150,931 160,414 2.3%

E-ISAC 18,515,341$ 18,996,833$ 481,492$ 2.6%

TOTAL EXPENSES and FIXED ASSETS (CAPITAL) 69,602,175$ 71,376,999$ 1,774,823$ 2.5%

* Costs reflect the allocation of overheads.

Change


2018 Preliminary Assessments“Base Case”

NERC overall assessment increase at 3.3%

for expenses and capital expenditures

FUNDING 2017 2018 $ %

Assessments

Program Areas 58,580,633$ 60,594,874$ 2,014,241$ 3.4%

CRISP 1,275,681 1,209,337 (66,344) -5.2%

Total assessments 59,856,314$ 61,804,211$ 1,947,897$ 3.3%

Assessment Stabilization Releases 1,100,000$ -$ (1,100,000)$ -100.0%

CRISP Member Funding 6,990,517 7,150,931 160,414 2.3%

Other revenues 2,204,830 2,090,000 (114,830) -5.2%

Other funding 10,295,347$ 9,240,931$ (1,054,416)$ -10.2%

TOTAL FUNDING 70,151,660$ 71,045,141$ 893,481$ 1.3%

Change



Personnel Costs* 3.3% increase in overall personnel costs

3.0% salary adjustment (merit and market), based on market feedback

Without considering E-ISAC, total FTE budget is stable

5.0% increase in medical/dental premiums

Other retirement benefits consistent with prior years

Meeting Expenses 0.7% increase overall related to conferencing expenses, adjusting WebEx

expenses based on historical usage

* Personnel costs include salaries, benefits, retirement, training/education, and temporary staffing.



Operating Costs increased 4.2% Contracts and Consultants increased mainly in E-ISAC

Office Costs increased due to A/V lease costs, offset by reductions in capital expenditures

Capital Expenditures decreased 22.3% Reductions in A/V purchases and software development costs; offset by

increases in CMEP and Entity Registration development spending


NERC Resource AllocationAcross Strategic Goal Areas

Goal 1Standards

11%

Goal 2Compliance

17%

Goal 3Risk Management

36%

Goal 4Emerging Risks

20%

Goal 5Effectiveness

16%

NERC Resource Allocation to Strategic Goal Areas


Budget By Program Area

27%

29%10%

10%

20%

4%

NERC 2018 Budget By Program Area

E-ISAC

CMEP

RASA

Standards

Reliability Risk Management*

Training

*Includes Performance Analysis, Event Analysis and Situation Awareness


2018 Preliminary Assessments

Before Considering Assessment Stabilization Reserve

• 3.3% average assessment increase for NERC*

• Potential for use of stabilization reserves

• Any use would apply to U.S. assessments only

Assessment Stabilization Reserve

• Balance at beginning of 2017 = $2,771,000

• Will add $500,000 during 2017 under existing settlement agreement

• Will use $1,100,000 during 2017 to offset billings

• Available funds for 2018 use = $2,171,000

* Average across US, Canada, and Mexico LSE’s.


Projected Reserve Balances

• Future Obligation Reserve ~$2.0M

• Operating Contingency Reserve ~$2.0M

• System Operator Certification Reserve ~$1.0M

• CRISP Reserve - $500k

• Assessment Stabilization Reserve – to be determined

2017 beginning balance was $2,771,000

2018 beginning balance projected to be $2,171,000

Release of funds would impact U.S assessments only


CMEP and Entity Registration Tools(reflected in base case)

• 2018 spend projected to be $2.1M Retained experienced consultant to assist in defining requirements,

evaluating technology needs, and selecting vendors and partners

Projects have been endorsed by NERC and the Regional Entity executive management team

The proposed 2018 budget includes $1.5M for CMEP technology program and $600k for entity registration tool

Business case is complete for Entity Registration, efforts underway to finalize business plan and evaluate project benefits for CMEP tool

Discussions with NERC Board and relevant Committees are ongoing, with final approval expected in November 2018


Geomagnetic Disturbance(NOT reflected in base case)

• 2018 spend projected to be $1.5M FERC Order requested NERC to submit a study plan for GMD

Ongoing discussions with EPRI on analytical work spanning multiple years

Additional technology needs (~$250k) for database management

Plan to submit filing on R&D plan, while requesting time to finalize the project structure and funding options


E-ISAC Strategy(NOT reflected in base case)

• Three new analyst positions already planned for 2017, reflected in 2018 base budget

• NERC Board and ESCC Members Executive Committee recently approved E-ISAC strategic plan, subject to review and feedback on resource requirements and budget

• Strategic plan will require additional personnel and technology investments

• Resources will improve threat analysis, information sharing, and industry engagement

• Detailed proposal included as addendum in May 19th BP&B posting

• June 14th review with MEC


E-ISAC StrategyImpact on Base Case Budget

2017 2018 $ %

NERC Budget (current base case) 69,602,175$ 71,376,999$ 1,774,824$ 2.5%

2018 E-ISAC strategic additions - 1,805,000 - -

NERC Budget - adjusted 69,602,175$ 73,181,999$ 3,579,824$ 5.1%

NERC Assessments (current base case) 59,856,314$ 61,804,211$ 1,947,897$ 3.3%

2018 E-ISAC strategic additions - 1,715,000 - -

NERC Assessments - adjusted 59,856,314$ 63,519,211$ 3,662,897$ 6.1%

E-ISAC

2018 Budget and Assessment Impact

Change


Remaining Schedule

• June 30 – Comments due on NERC 1st draft

• July 13 – Closed FAC call to review proposed final draft budget and assessments

• July 17 – Post final draft NERC and Regional Entity BP&Bs and assessments to FAC

• July 20 – FAC webinar for review of final NERC and Regional Entity BP&Bs

• July 27 – Comments due on NERC final draft

• August 9 – FAC meeting to recommend approval of final NERC and Regional Entity BP&Bs and assessments

• August 10 – Board of Trustees meeting to approve final NERC and Regional Entity BP&Bs and assessments

• August 24 – Submit NERC and Regional Entity BP&Bs and assessments to FERC for approval, with subsequent filings with Canadian authorities

nerc 2018 business plan and budget draft 1 … nerc business...•july 17 –post final draft nerc...

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